The game's story centers on Guybrush Threepwood, a wannabe pirate who must lift a curse from his love Elaine Marley. As the story progresses, he must deal with a band of mysterious pirates, a rival stereotypical French buccaneer, a band of cutthroat smugglers, as well as his old nemesis LeChuck.

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Guybrush Threepwood and Wally are standing in the first room of the game. The new verb interface is shown.

The Curse of Monkey Island is a point-and-click adventure game. The SCUMM engine was also used in this Monkey Island installment but it was upgraded to a "verb coin" (modelled after Full Throttle), an interface that consisted in a coin-shaped menu, with three icons: a hand, a skull and a parrot, basically representing actions related to hands, eyes and mouth, respectively. These icons implied the actions Guybrush would perform with an object. The hand icon would usually mean actions such as picking something up, operating a mechanism or hitting someone, the skull icon was most used for examining or looking at objects and the parrot icon was used to issue Guybrush commands such as talking to someone or opening a bottle with his teeth. The inventory and actions were thus visible on click, rather than on the bottom of the screen as previous point-and-click games by Lucasarts.

The player controlled a white 'X' cursor with the mouse, that turned red whenever landing onto an object (or person) with which Guybrush could interact. Holding left click over an object, whether in or outside the inventory, would bring up the coin menu, while right clicking it would perform the most obvious action with this particular object. Right clicking a door, for example, made Guybrush attempt to open it, while right clicking a person meant talking to him or her.

Guybrush Threepwood is adrift in the sea in a floating bumper car, unable to recall how he escaped from the Big Whoop amusement park. He approaches Plunder Island, which is governed by his love Elaine Marley and under siege by the zombie pirate LeChuck. LeChuck captures him and locks him in the ship's hold. Seeking a way out, Guybrush fires an unrestrained cannon (causing LeChuck to drop a magical voodoo cannonball and explode), finds a diamond ring in the treasure hold, and escapes the ship as it sinks. He reunites with Elaine and proposes to her with the diamond ring. However, the ring is revealed to be cursed, and when Elaine puts it on she is transformed into a gold statue and stolen by marauders.

The Voodoo Lady tells Guybrush he must travel to Blood Island to find a diamond ring of greater value to break the spell. Guybrush recovers the statue Elaine, finds a map to Blood Island and secures a ship and crew to take him there. On the journey, the ship is attacked by Captain Rottingham, who steals the map. After much practice, Guybrush learns seabattle insult swordfighting and defeats Rottingham when they next meet, reclaiming the map. However, soon afterwards, Guybrush's ship crashes on Blood Island in a storm, Elaine's statue is launched inland, and the crew mutinies. Meanwhile, LeChuck is inadvertently revived as a pyrokinetic demon-pirate by a scavenging pirate, and sails back to his carnival on Monkey Island to organize the capture of Guybrush and Elaine.

Alone on Blood Island, Guybrush meets the locals, including the cannibals of Monkey Island, learns a sad tale of lost love, and feigns death to enter a crypt and secure a new engagement band. He gambles with smugglers in order to acquire an uncursed diamond, combines the two to make a new ring, and returns Elaine to normal. The two share a moment before LeChuck's skeletal army seizes them.

LeChuck transforms Guybrush into a child once again and leaves him in the Big Whoop amusement park with Elaine. Using a hangover cure discovered on Blood Island, Guybrush becomes an adult again and gets on the Rollercoaster of Death to confront LeChuck. Guybrush improvises an explosive and sets off an avalanche, burying LeChuck under the theme park. Guybrush and Elaine marry and set sail for their honeymoon, as various friends that were met on his adventures wave them goodbye.

During production, examples of major changes include enhancing the role of Murray, the talking skull. Originally intended only to be featured in the first chapter, he proved so popular with test players that he was written to re-appear at several points later in the game.

The game was later re-released on a CD-ROM compilation of Monkey Island games, bundled with The Secret of Monkey Island and Monkey Island 2: LeChuck's Revenge called the Monkey Island Bounty Pack. It leaves a gap in the series for Macintosh users since it was never officially released for that platform (although the free ScummVM software can be used to play The Curse of Monkey Island on a Mac).

After the game shipped, a Monkey Island film was in the works. This was only brought to light when Tony Stacchi, a concept artist for the project, sent his work to The Scumm Bar, a Monkey Islandfansite.[1] The film was cancelled in the early stages of development but Tony Stacchi published the artwork on his portfolio.[2]

Non-English versions of the game omit the section at the beginning of CD2, where Guybrush's crew sings the song "A Pirate I Was Meant To Be". In this section, the player as Guybrush has to stop the crew's singing - however, at each attempt, they just start a new stanza rhyming to the player's line, until he says a line ending with the word "orange" making the song unable to continue. As the whole section relies on English language rhyming, it was removed from international versions of the game.

The Curse of Monkey Island received almost uniformly positive reviews from the media. Computer Gaming World said that "it joins LucasArts' hallowed pantheon of comic classics", and that "computer gaming rarely gets more entertaining than this".[7]GameSpot praised the graphical style for making the game "as much fun to watch as it is to play".[9] Just Adventure emphasized that the "music is the best I've ever heard in a game; [...] it never stops and it's never annoying; it's always a joy".[12] RPGFan commented that the "additions of detailed graphics and actual spoken dialogue managed to take the already hilarious story to a whole new level".[13] Adventure Classic Gaming addressed plot criticism, saying "some [...] may criticize the numerous farfetched plot twists in this game", while "some may just call it creative writing!",[14] and Adrenaline Vault likened The Curse of Monkey Island to the adventure genre as a whole, saying: "The twin vitals of an adventure game are a good plot coupled with strong dialogue. This game has both, in spades."

Although Adventure Gamers cited the graphic style's "refusal to take itself seriously" was adding "immensely to the game's charm", they found the secondary characters "criminally underdeveloped" and the ending "an anticlimax, leaving the player thinking he could have done so much more, if only the game’s programmers had let him".[5] The abrupt ending of the game received criticism from GameSpot, Just Adventure and Computer Gaming World; the last of which called the ending "the game's only real disappointment".[7]PC Zone described that due to the introduction of cartoon-ish graphics "for Monkey devotees of the first two titles something tiny and almost intangible has been lost", while still scoring the game a 92/100, praising the voice over work and humor of the game.[11]

The Curse of Monkey Island was nominated in the Academy of Interactive Arts & Sciences' first annual Interactive Achievement Awards in the categories "Computer Adventure Game of the Year" and "Outstanding Achievement in Art/Graphics".[15]